Fear And Greed Index China

[Latarsha Dorrance]

Whats going on? Investors are spooked by the same factors that have been around for months: China's slowdown, Greece's possible exit from the euro, and the Federal Reserve's first interest rate hike expected in September.

None of this is new, but it's getting real. On Monday, China's Shanghai Composite index fell a whopping 8.5% -- its worst single day decline since February 2007. While America investors don't have a lot of exposure to China's stock market, they do have exposure to China's economy since so many U.S. businesses are now operating there.

"Despite the select group of standout winners, earnings season has been precarious. There is a serious risk that this situation will turn out to be one in which the earnings cycle has peaked prior to the Fed starting a tightening cycle," warns Mike O'Rourke, chief market strategist at Jones Trading.

Of course, momentum can change quickly in the stock market. Keep an eye on the big earnings this week from tech stocks like Twitter (TWTR) (Tuesday), Facebook (FB) (Wednesday), and LinkedIn (LNKD) (Thursday) for a read on how social media and advertising are doing. Big oil companies Exxon (XOM) and Chevron (CVX) report earnings Friday, offering another look at just how bad oil and commodities are doing this year.

The real fear factors: But CNNMoney's Fear & Greed Index points to deeper issues in the markets beyond the headlines. There are 7 factors that make up the Fear & Greed Index. Only one of them is in "neutral," the rest are displaying extreme fear.

1. Volatility is ok. Most people keep an eye on volatility in the stock market by watching the VIX volatility index. It measures changes in S&P 500 options, so it's a good read on whether investors are buying or selling more. Volatility is up a bit in recent days, but it's still near historic lows.

2. Bonds are a red flag. Bonds have outperformed stocks during the past 20 trading days. It's close to the weakest performance for stocks relative to bonds in the past two years, and that is an indicator that people are fleeing to safety. Similarly, investors are looking twice at junk bonds. They are demanding higher and higher rates on junk bonds, which means people are more worried about risk.

3. Lots of stocks are hitting lows. When the stock market is chugging along, lots of individual stocks hit all-time highs. That's not happening right now (Amazon (AMZN) is an exception). The number of stocks hitting 52-week lows now exceeds the those hitting highs.

Furthermore, the S&P 500 is over 1% below its 125-day average. During the last two years, the S&P 500 has typically been above this average, so rapid declines like this indicate extreme levels of fear.

4. Investors are betting on a drop. When investors think the market or an individual stock is going to go down, they buy so-called put options. We are seeing the highest levels of put buying, indicating extreme caution on the part of investors.

All of these factors are driving CNNMoney's "extreme fear" reading. Of course, the index has shown worse readings. Last October when the market tanked sharply, the Fear & Greed Index went to 0 briefly.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: 2019 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc.2019. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices S&P Dow Jones Indices LLC 2019 and/or its affiliates.

The Crypto Fear and Greed Index provides a score of 0 to 100, categorising bitcoin sentiment from extreme fear to extreme greed. Many crypto traders use the index to help them find the right time to enter and exit the market. In this guide, we cover everything from how it works to how you can use it to help you trade.

Many traders use the index as a market indicator, a tool that gives them information about the market to help them trade smarter. Analysing the overall sentiment and the emotions driving the market has helped many traders outperform the market.

The index is calculated by Alternate.me using a range of sources: volatility, market momentum/volume, social media, dominance, and trends. Surveys have also been used in the past, but are currently paused. Also, the signals are based on bitcoin, but other large cryptos like ethereum may be incorporated into the index soon.

As you can see, the index generally sits in the greed range and rarely drops into extreme fear for more than a month. It also shows us bitcoin sentiment has correlated with major events in crypto over the past two years.

We can see that the index hit its lowest point in March 2020, as panic about the coronavirus spread and both financial markets and the crypto markets sold off, including Ethereum, Litecoin, Terra, and Ripple.

At a broader level, this chart reveals two important things about the Crypto Fear and Greed Index. Firstly, it can change incredibly rapidly as news breaks or prices slide. Secondly, it can stay in the greed and extreme greed levels for extended periods.

Looking at the Crypto Fear and Greed Index, we can see how the overall market can behave irrationally in the short term. As individual investors, we ask ourselves, how can I control my emotions and not let greed or fear drive my investing decisions?

Dollar-cost averaging (DCA) is a popular investment strategy in the cryptocurrency industry because it helps remove emotions from investing. The strategy involves making regular small investments over time, rather than trying to time the market with one big investment.

The finance channel CNNMoney originally developed a Fear and Greed Index for stocks. It looked at how far several indicators had deviated from their averages to give the stock market an overall rating between 0 and 100. While the Crypto Fear and Greed Index uses different indicators, the idea was certainly inspired by CNN.

Many traders check this indicator daily as it gives them a quick sense of the market. When it hits extreme greed or extreme fear, they often take it as a signal to look at all of the trading signals more closely. They most often check financial metrics like supply and demand or market capitalisation and sometimes dive deeper with on-chain indicators.

Disclaimer: Information provided is for educational purposes and does not constitute financial product advice. You should obtain independent advice from an Australian financial services licensee before making any financial decisions.

Financial traders use a wide array of resources and tools before making any decisions, including reading and analysing trends, conditions and price actions. These readings help them understand the market sentiment and execute buy and sell orders accordingly.

Traders can incorporate the trading sentiment index into their strategies, assisting them in making investing decisions. However, it must not be the sole source of information because it may not reflect accurate values.

The fear and greed index alone is not reliable for making trading decisions. It is best used in conjunction with other indicators and signals. Most investors analyse the market mood index today or the historical changes to understand the patterns of a particular market or asset.

The market momentum index can be used as a risk analysis tool. If the market mostly resides in the red area or under the score of 50, this suggests that participants are mostly reluctant to invest and buy assets, referring to higher risks.

However, when the indicator shows extreme fear or extreme greed, this might mean that the asset is oversold or overbought, and a trend reversal can be due at any time, marking a chance to enter or exit the market.

The Bitcoin Fear & Greed index, which is a multifactorial measure of crypto market sentiment, rose to a 16-month high of 68 points today, signaling that investors are becoming more greedy than fearful.

Here's our summary of key economic events overnight that affect New Zealand, with news a sense of dread you might get looking at financial markets from the outside isn't being reflected in the activity of those markets.

But first the worrying news. We should note that American benchmark mortgage interest rates topped 7.5% last week for the first time since November 2000. 8% rates seem in sight. So it will be no surprise to learn that mortgage applications were weak there last week, down a sharp -6% from the prior week, and down -22% from the same week a year ago.

Holding that weaker theme, and after rising +180,000 in August, the pre-cursor ADP Employment Report of private payrolls was expected to rise +153,000 in September. But it rose just +89,000 which is a negative signal ahead of Saturday's US non-farm payrolls report. Weakness was shown in factory jobs, employment in the South, and by large firms. Analysts are expected the non-farm, payrolls to grow a modest +170,000 but there seems to be downside risks. At least the US Fed will like to see an easing. And equity and bond markets responded in that way with stocks up and benchmark bond yields easing back.

But not every indicator out today is negative. The closely-watch ISM services PMI shows no such weakness for September. Yes it eased slightly, but it is just off its six month high and expanding at a healthy clip. Employment held up, but if there is a weakness it is a sag in the new order expansion levels.

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